'Unprecedented': Energy operator in daily fight to keep lights on

The energy market operator is being forced to intervene daily in the electricity grid as an influx of renewable energy and ageing coal-fired power stations make the system unstable.

The Australian Energy Market Commission’s (AEMC) latest grid performance report found the “unprecedented change” caused by an increasing level of wind and solar power has forced the power system to change faster than expected and that it was failing to keep up.

The AEMC said the Australian Energy Market Operator (AEMO) has had to step in more frequently to keep the grid stable.

The electricity grid is seeing more intervention as the system struggles to cope with rapid change to more renewable energy.Credit:Glenn Campbell

“The grid is holding up but only because the energy market operator is intervening on a daily basis to keep the lights on,” the AEMC said its 2018 Annual Market Performance Review, released on Thursday.

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The grid instability is being caused by less predictable, intermittent wind and solar power flowing into the network coupled with less reliable coal-fired power stations.

The AEMC said the power system’s built-in safety nets were being used on a regular basis to combat the grid's instability.

More than 200,000 Victorian households had their electricity temporarily cut while manufacturer Alcoa was forced to power down its Portland-based aluminium smelter.

The AEMC said the continual use of security safety nets is costly and would mean the historically high power prices would likely not fall.

“These emergency, expensive ‘stop-gap’ measures are not meant to be used all the time,” it said.

The AEMC said this could be alleviated by investment in more generation and back-up power for intermittent renewables.

AEMC chief executive Anne Pearson said an integrated energy and climate policy could encourage an investment in new power generation.

“We have been saying for some time now we need an integrated emissions and energy policy,” Ms Pearson said.

“Our market needs investment in generation to drive down prices [through more power supply], and private investment needs certainty for this, the best way to drive down prices is to give certainty through policy."